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An Analysis of the Effects of OFDI on China’s Foreign Trade
HU Zhao-ling1,2, SONG Ping2
1. Center for Transnationals’ Studies, Nankai University, Tianjin 300071, China;2. Department of International Economics and Trade, Nankai University, Tianjin 300071, China
Abstract The effects of outward foreign direct investment (OFDI) on China’s foreign trade is disscussed. theoretically, there is no definite conclusion concerning the relationship between FDI and foreign trade. This paper analyzes the mechanism through which OFDI affects import and export. In light of the panel data covering 105 countries (regions) during 1993~2009, a positive research is conducted on OFDI on China's foreign trade with panel Granger causality test based on panel VAR model. It is found that there is two-way Granger causality between China's OFDI and export, and the same relationship exists between China’s OFDI and import； OFDI has trade creating effects on China’s import and export, though the effects are still limited. Therefore， China should actively develop OFDI and promote benign interaction between OFDI and foreign trade.
2012, Vol. 1 
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